04/27/2006 11:00PM

Tropicana bidding war tops $2.4 billion


The jockeying for position to win this year's Kentucky Derby is nothing compared to the jockeying for a position - or in this case a piece of prime real estate - on Las Vegas Boulevard.

As the real-life Monopoly game on the Strip continues, the Boardwalk of this game has turned out to be the Tropicana hotel casino, which sits on the southeast corner of Tropicana Avenue and the Strip.

This corner developed into one of two major Strip intersections - along with the Strip and Flamingo Road - with the MGM Grand, New York New York, and the Excalibur mega-resorts anchoring three of the four corners. On the fourth corner is the Tropicana, which has been there longer than any of the others. At one time, the Tropicana marketed itself as the "Island of Las Vegas," boasting a sprawling tropical-themed pool. But time has passed it by, and its owner, Aztar Corporation, has been considering - forever, it seems - to announce its plans for the property.

Aztar's patience has paid off, as the Tropicana has become the focal point of a bidding war among no less than four gaming companies. And Aztar and its stockholders are enjoying the ride.

On March 13, after weeks of clandestine negotiations, Las Vegas-based Pinnacle Entertainment announced a buyout of Aztar to the tune of $2.1 billion, which would amount to $38 per share. Pinnacle generated $726 million in revenue last year from gaming outlets in Indiana, Louisiana, Argentina, and Reno, Nev. Finally, Pinnacle would get a place on the Las Vegas game board. Pinnacle announced a plan that would keep the Tropicana open for at least two more years, at which time it would be demolished for a new $3 billion redevelopment.

But not long after the announcement from Pinnacle came a bid from Colony Capital Corporation, whose holdings include the Las Vegas Hilton. Colony bid $41 per share, upping the ante for the Tropicana. Just when that dust settled, came another bid from another gaming company. Columbia Sussex, which operates four Nevada casino properties, raised the high-stakes game to $47 per share.

While Pinnacle and Colony Capital were digesting the higher price to play the game, yet another bidder for the Tropicana stepped forward. Ameristar Corporation - which operates casinos in Jackpot, Nev., Mississippi, Colorado, and Missouri - rolled the dice to the tune of $45 per share. Although that bid was short of the offer from Kentucky-based Columbia Sussex, many industry analysts believed that Columbia's bid would fall to licensing and financing scrutiny.

On Monday, Pinnacle amended its original bid to match Ameristar at $45 per share with a new agreement that has Aztar paying Pinnacle $49.6 million in termination fees and up to an additional $16 million in related expenses if their deal is not culminated.

Not over yet. On Tuesday, Ameristar countered, tendering $47 per share of all outstanding Aztar stock, putting the value now at $2.41 billion. In a matter of six weeks a total of nine amended or original bids have been offered. And, of course, by the time you read this there could be number 10.

Ralph Siraco is turf editor for the Las Vegas Sun and host of the Race Day Las Vegas radio show.